Stocks closed mixed yesterday on lighter trade. Small and mid cap issues underperformed, as large cap issues closed near break even. The small-cap Russell 2000 (NYSEArca:IWM) and the S&P MidCap 400 gave back some of Tuesday’s gains, as they fell 0.9% and 0.7% respectively. The S&P 500 (NYSEArca:SPY) slid 0.1% while the Dow Jones Industrial Average (NYSEArca:DIA) managed to close higher by 0.1%. The Nasdaq ended the session fractionally higher. Sectors demonstrating the most strength yesterday included computer hardware, healthcare and steel. Relative weakness was found in transportation, coal, oil services, telecom, utilities and gold mining.
Market internals ended the session mixed. Volume slid on the Nasdaq by 1.9% and on the NYSE by 4.1%. However, declining volume topped advancing volume across the board. The spread ratio ended the day at -1.7 to 1 on the NYSE and -1.4 to 1 on the Nasdaq.
Yesterday, the iShares Brazil Index Fund (NYSEArca:EWZ) sold off for most of the session before recovering to close near the day’s highs. Further, the reversal occurred on high volume which adds bullish credence to the move. A rally above the four day high of $68.30 could present a buying opportunity in this ETF.
Over the past five sessions, the SPDR S&P Emerging Markets Small-Cap Fund (NYSEArca:EWX) has been consolidating at its 10-day moving average and just below resistance of its recent swing high. A volume fueled move above the two day high of $47.49 could provide a buy entry trigger for this ETF.
The sole ETF watchlist candidate, (NYSEArca:DIG), triggered yesterday and we are now long. DIG struggled the entire session and closed below support of its 20-day EMA. XLU gave back all of Tuesday’s gains and closed near session lows. However, (NYSEArca:XLU) has support of the 20-day EMA at its current level. IYR spent the session consolidating near Tuesday’s high. Through mid-afternoon yesterday, both the NYSE and Nasdaq were on pace to deliver a distribution day. We never like to see distribution days on the heels of an accumulation day. However, by the close, volume finished lower and the DJIA and Nasdaq managed to find their way into the black. What could have been a disaster ended up being quite bullish price action for the market. The market showed the kind of resiliency we like to see in a bull market.
Deron Wagner is a professional hedge fund manager who founded Morpheus Trading Group, a swing trader education firm, in 2002. He is the author of the best-selling book, Trading ETFs: Gaining An Edge With Technical Analysis. His new book, Advanced Technical Analysis of ETFs, will be released in August 2012. Past television appearances include CNBC, ABC, and Yahoo! FinanceVision. Wagner is also a frequent guest speaker at various trading events around the world, and can be reached by sending e-mail to: [email protected]